Senate Dems shy away from tax vote

Top Senate Democrats said Thursday that the party was backing away from earlier plans with the White House to force a vote on middle-class tax cuts prior to November’s election.

Emerging from a party caucus, Majority Leader Harry Reid (D—Nev.) ducked by reporters, saying only “we’re close to something but not there yet.” But Senate Appropriations Committee Chairman Daniel Inouye (D-Hawaii) said flatly that he expected the vote to be put off and other senators echoed the same judgment. “I think we’ll put it off,” Inouye told POLITICO

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The decision is a real political Rubicon with no safe choice in today’s political climate, and much as taxes gave been a third rail for Democrats, no vote at all will be seen by many as a sign of weakness.

Indeed, together with President Barack Obama, the Senate Democratic caucus pushed hardest to raise the tax issue, and a Senate retreat makes it all but certain the House will go home without acting either.

As recently as Tuesday evening, Reid had told POLITICO he was “working hard for a vote,” most likely next week. But the mood grew more negative Wednesday, with Reid being warned away from proceeding unless he was convinced of having the 60 votes to break a Republican filibuster.

“If we can get it passed, then I would favor doing it. I favor the position that is a bill limited to middle income tax cuts,” Senate Armed Services Committee Chairman Carl Levin (D-Mich.) told POLITICO. “But if it looks like we can’t get it passed for whatever reason. filibuster, whatever reason that it is, then I would prefer to get it away from the political season.

“A loss hurts the bill’s chances in the future.”

A solid camp including Senate Finance Committee Chairman Max Baucus (D-Mont.) and a key Reid adviser, Sen Charles Schumer (D—N.Y.) have argued strongly for a vote. And Baucus has been drafting a proposal to make permanent all of the Bush-era tax cuts for households earning under $250,000 a year.

This would leave the high-end rates – impacting the wealthy and some small business owners—to rise at the end of this year. But to appease moderates, Baucus would also provide permanent relief for the estate tax — also slated to rise next year.

The Baucus plan would cost about $2 trillion over 10 years or half of a much richer alternative crafted by Senate Minority Leader Mitch McConnell (R-Ky.), who would make all of the expiring Bush tax breaks permanent and add a $1 trillion long term provision to limit the number of taxpayers impacted by the alternative minimum tax.

Many liberal Democrats had looked forward to the prospect of a side-by-side standoff between the two plans next week in expectation that neither would get to 60 votes but each party would be able to better outline its position. But after the first bold statements, an uneasiness— and inertia—has settled in with moderates defecting and more Democrats wanting to go home without making a choice.

White House officials have been warning this week that they expected no vote — provoking some frustration among liberals that the administration wasn’t doing more to intercede.

“This may take a while before we sort this out,” conceded David Axelrod, a top adviser to the president. But Axelrod told POLITICO that Obama remains fully committed to the issue and was prepared to raise it even in the face of high-end taxpayers at a fundraiser in New York on Wednesday night.

“We’re very committed,” he said. “I am a strong believer in this issue.”

Making the fight — even to this point — has contributed to the recent improvement for Democrats in public polls, Axelrod suggested. And he said House Republicans risked hurting themselves in their attacks on the president’s “Making Work Pay” tax breaks in the Recovery Act – also impacting working class and middle income families